The Australian Bureau of Statistics have released the Construction Work Done report for the June quarter, showing an increase in residential building work increase of 3.6%, valued at $13.379 billion.
The increase was attributed to strong construction work in Victoria, New South Wales and Tasmania, where construction work has been the strongest, posting an increase for the last 3 quarters. The Australian Capital Territory posted an increase after a two year decline in construction work. Meanwhile, declines in construction were seen in Queensland, South Australia, the Northern Territory and Western Australia.
Residential construction also increased to 3.2% this quarter, with detached house construction driving the growth of the residential sector.
Read more about this on the Property Observer website.
The International Monetary Fund has a suggestion for the Reserve Bank to counter the rising house prices without having to raise rates – set up lending limits for home loans.
With banks now having the ability to play around with economic tools that allow them to offer varying loan types, IMF managing director Christine Lagarde has stated that that ”The Australian Central Bank, under the strong leadership of its governor, will able to deal with it.”
Banks have yet to comment on the situation, as loan limits will eventually require the Big 4 banks to increase their capital, as the chances of a taxpayer funded bailout are reduced and will require the banks to raise more money – significantly reducing their profitability.
Read more about this on the Yahoo Finance website.
Investors share on the loan market have increased to 40.6% for August, well above the average of 30.9% for the past 23 years, clear signs that the insatiable appetite for property are far from satisfied.
Refinanced owner occupied home loans have also increased to a record high 49.7%, well above the long term average of 36.5%. Despite these numbers, home lending for investors has actually slowed down, rising just 6% in 6 months, compared to a 21% increase 6 months before. Home buyers are clearly outgunned as lending dropped by 4% in the past 6 months, as opposed to a 9% gain 6 months prior.
Despite the Reserve Bank’s warning on the glaring disparity between home buyers and investors, the building industry has remained as one of the most optimistic sectors in the economy as the mining boom starts to fade.
Read more about this on the Australian website.
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The Reserve Bank has pegged the interest rates at a historic low of 2.5%, and home owners are taking advantage of this by locking in their mortgage loans. Fixed rate loans have surged to 33% of total home loans, its highest level in more than 5 years.
There has been a drastic increase of borrowers considering fixed rate options, from 16.35% in January 2013, to 33.06% in December of the same year – around the same time the RBA met and kept the interest rates at its current low rate.
Fixed rate loans are a great option to pay your mortgage, making the repayment process stress free, as you have a clear figure on your monthly dues. Borrowers are also encouraged to weigh in on the long term benefits of this repayment scheme, as any extra repayments with fixed rate loans normally come at a fee, as compared to variable rate loans where any extra repayments are free. Consult a financial planner to verify what the perfect repayment scheme is for you.
Read more about this on the Herald Sun Website.
Auctions are not losing steam as properties sold under the hammer prepares for the final weekend this year.
Sydney will be hosting 309 properties over the weekend, 4 times than the 73 properties auctioned off the same time last year. Last week, 995 properties were sold under the hammer, a record breaking performance for Sydney. Despite this historic number, Sydney was able to accomplish a 76.1% clearance rate. Melbourne was able to bounce back by putting up a 72% clearance rate, higher than the week before at 67%.
These historic performances are very unlikely to happen again next year, according to economists. But based on this year’s performance, anything is possible. Not many predicted the property sector to perform this well, but we saw it unfold right before our eyes.
Read more about this on the Real Estate Business website.
After 3 years of struggle for the construction sector is slowly gaining traction after posting favorable results for the past two months. The Australian Performance of Construction Index (PCI) rose by 0.8 percentage points – the highest rating since November 2010.
All other construction subsectors are also performing well, with Home constructions increasing to 62 points, apartments by 57.9 points and construction with 52.9.
Due to strong demand for property, and calls to meet housing demands, the construction sector is on its way to recovery. With the Reserve Bank of Australia keeping cash rates at 2.5%, and with high home clearance rates, this sector’s performance is necessary to keep the balance in the Housing industry.
Read more about this on the Age website.